France economic growth accelerates, stoking debate on ECB tapering

epa05568031 A general view of the city of Paris as  photographed from the top of the Jussieu University tower in Paris, France, with the Eiffel tower at distance (R), 29 September 2016. The Eiffel tower is one of the most popular touristic sites in Paris. Paris tourism took a hit following terror attacks in November 2015, with one million visitors less coming to the city in 2016, whereas the city normally is visited by some 16 million visitors each year. Tourism makes some 7 per cent of France's annual GDP.  EPA/ETIENNE LAURENT / POOL



French growth accelerated in the fourth quarter as part of a wider economic expansion in the region that is fueling a debate about how quickly the European Central Bank should trim stimulus.
Gross domestic product rose 0.4 percent in the October-December period, national statistics office Insee said. That matches the median estimate in a Bloomberg survey and compares with 0.2 percent growth in the previous three months. Inflation accelerated to 1.6 percent in January, the most since November 2012, while a separate release showed price growth in Spain surged to 3 percent.
France’s performance in the fourth quarter, along with solid growth in both Germany’s and Spain, means the expansion in the euro area probably strengthened at the end of 2016. With inflation rates rising across the region, a discussion about the ECB’s 2.28 trillion-euro ($2.4 trillion) bond-buying program is set to intensify.
“The euro zone is getting good nominal growth and rising inflation, a scenario in which pressure on the ECB is going to increase,” said Michel Martinez, an economist at Societe Generale SA in London. “There are fewer and fewer people who will understand the need to continue doing quantitative easing.”
In the euro area, growth probably accelerated to 0.5 percent in the fourth quarter from 0.3 percent, while the inflation rate rose to 1.5 percent in January from 1.1 percent the previous month, according to separate Bloomberg surveys. Eurostat will release those data at 11 a.m. Paris time.
The Austrian economy grew 0.6 percent in the final three months of 2016, up from 0.5 percent, the country’s Institute of Economic Research said Tuesday. Inflation in Spain surged to 3 percent this month, the highest level since 2012, according to the nation’s statistics office. German unemployment fell by 26,000 in January to 5.9 percent, the lowest rate since the country’s reunification.
In France, household spending and corporate investment spurred the fourth-quarter expansion, allowing domestic demand to contribute 0.6 percentage point to growth. External trade added 0.1 percentage point, Insee said. The French economy grew 1.1 percent in all of 2016, compared with 3.2 percent in Spain and 1.9 percent in Germany.

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